A practical BAS preparation checklist

The business activity statement (BAS) is the report most Australian businesses deal with most often. It is where you report GST, PAYG withholding from wages, PAYG instalments and some other taxes, and it is also where errors show up first. A rushed BAS can mean paying too much, claiming too little, or attracting questions from the ATO later. A reliable BAS is mostly the product of good monthly habits. This checklist sets out what to do before, during and after preparing it.

Before you start

Know your obligations

Check what your BAS needs to report. Depending on your business it may include:

• GST on sales and GST credits on purchases
• PAYG withholding from wages and other payments
• PAYG instalments towards your income tax
• fringe benefits tax instalments, fuel tax credits, or other items for some businesses

Your ATO account or your registered tax agent can confirm exactly which sections apply to you, and whether you report quarterly or monthly.

Know the due date

For most quarterly lodgers who lodge themselves, the due dates are 28 October, 28 February, 28 April and 28 July. Monthly lodgers are generally due on the 21st of the following month. If a registered tax agent lodges for you, different dates may apply. Put the dates in your calendar with a reminder two weeks ahead, not on the day.

Step 1: Get the books up to date

A BAS can only be as accurate as the books behind it. Before running any report:

• make sure all sales invoices for the period have been raised
• enter all supplier bills, receipts and expense claims for the period
• record any cash sales
• record all pay runs for the period

If you run a month-end close, most of this is already done.

Step 2: Reconcile everything

• reconcile every bank account, credit card and loan account to its statement as at the last day of the period
• reconcile payment platforms and merchant facilities
• clear or explain anything sitting in suspense or uncategorised accounts
• check that receivables and payables reports reflect reality, since on the accruals basis GST is reported on invoices, not payments

An unreconciled bank account is the single most common reason a BAS is wrong.

Step 3: Check GST coding on sales

Run a GST or BAS report from your software and review the sales side:

• Total sales (label G1) — does it agree with total income in your profit and loss for the period, allowing for GST and any non-reportable items?
• GST-free sales — are exports and other GST-free sales coded correctly, not as taxable?
• Input-taxed sales — are items such as residential rent or interest income excluded from GST?
• GST on sales (label 1A) — as a rough check, it should be close to one-eleventh of your GST-inclusive taxable sales.
• Asset sales — if you sold a vehicle or equipment, has GST been accounted for on the sale?

Our GST guide explains the different categories if any of these are unclear.

Step 4: Check GST credits on purchases

Review the purchases side:

• GST on purchases (label 1B) — scan the transactions making up this figure.
• Tax invoices — confirm you hold a valid tax invoice for purchases over $82.50 including GST.
• No GST items — wages, superannuation, bank fees, interest, most government charges and life insurance premiums should not carry a GST credit. Check that they have been coded without GST.
• Private use — make sure only the business portion of mixed-use items, such as a phone or vehicle, has been claimed.
• Overseas suppliers — many overseas subscriptions do not charge Australian GST. Check that you are not claiming a credit that was never paid.
• Large purchases — check capital purchases such as equipment or vehicles have been coded correctly. If you report on the full BAS rather than Simpler BAS, they are shown separately from other purchases.
• Entertainment and other restricted items — some expenses have limited or no GST credit entitlement.

Step 5: Check PAYG withholding

If you have employees:

• Total salary, wages and other payments (label W1) — agree this to your payroll reports for the period.
• Amounts withheld (label W2) — agree this to your payroll reports and to the PAYG withholding liability account in your balance sheet.
• Report any amounts withheld from other payments, such as payments to suppliers who did not quote an ABN, at the correct label.

With Single Touch Payroll, the ATO already receives your payroll data each pay day, so differences between your BAS and your payroll reports are easy to spot from their side. Our article on payroll, STP and super covers the employer obligations.

Step 6: Check PAYG instalments and other items

• If the ATO has notified you of a PAYG instalment amount or rate, check you are using it.
• If you are using an instalment rate and your income has changed significantly, discuss with your accountant or registered tax agent whether a variation is appropriate. Varying instalments too low can attract penalties.
• Include any other items that apply, such as fuel tax credits.

Step 7: Sense-check the totals

Before lodging, step back and look at the result:

• Compare the figures with the same period last year and the previous period. Are the movements explainable?
• If you are due a refund, is there a clear reason, such as a large equipment purchase?
• Does the net amount payable look reasonable against your sales and costs?

As an example, if a business with fairly steady quarterly sales of around $300,000 suddenly shows GST payable at half its usual level, something has probably been missed or miscoded.

Step 8: Lodge, pay and lock

• Have the BAS lodged by you or your registered tax agent, keeping a copy of what was lodged.
• Pay the amount owing by the due date. If you cannot pay in full, contact the ATO or your tax agent early to discuss options. Lodge on time regardless.
• Set a lock date in your accounting software for the period, so the figures that support the lodged BAS cannot be changed by accident.
• Note any errors found after lodgement. Many can be corrected in a later BAS, within limits; others need a revision of the original. Ask your tax agent which applies.

Habits that make every BAS easier

• Set GST aside as you collect it. A separate bank account for GST and withholding means the payment is never a cash shock. A 13-week cash flow forecast helps you see it coming.
• Code consistently. A tidy chart of accounts with correct default GST codes prevents most errors before they happen.
• Capture receipts as you go. Missing tax invoices are far easier to chase in the same month than three months later.

A good BAS is not prepared in the week it is due. It is the result of books that are kept reconciled and reviewed throughout the quarter.

How we can help

We can review your books before each BAS, help set up your software so GST and PAYG are captured correctly, and work alongside your registered tax agent on lodgement. Learn more about our accounting services or contact us.

This article is general information only and does not take into account your circumstances. Speak to a qualified adviser before acting on it.